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- Policy Reform Work
Our projects are designed to empower policy makers to create positive change. With a focus on collaboration and outreach, we provide original, standards-based research on key policy issues.
SCEPA joined with the Economic Policy Institute on Capitol Hill to brief congressional staff and policy experts on tax expenditures, or incentives given through the tax code without scrutiny by Congress.
SCEPA economists are working on the prospects for a more progressive economic order to emerge from the shock of the recession. They have published papers and documents that place current events in a longer-term context as well as policy proposals to deal with short-term concerns. They are also documenting the emerging discussion of how the discipline of economics is reacting to the Great Recession and the questioning of conventional economic analysis.
Lance Taylor, a SCEPA Faculty Fellow, presents an overview of his new book, Maynard’s Revenge, in a Google Tech Talk.
The book, published this November by Harvard University Press, is a timely analysis of mainstream macroeconomics, posing the need for a more useful and realistic economic analysis that can provide a better understanding of the ongoing global financial and economic crisis.
The government spends $143 billion through tax breaks in an effort to expand pension coverage and security. Yet, over half of the American workforce does not have a pension. Retirement insecurity hurts business plans, workers’ lives and retiree well-being. Reform is needed.
SCEPA’s Guaranteeing Retirement Income Project, sponsored by the Rockefeller Foundation and in collaboration with Demos and the Economic Policy Institute, has a plan to guarantee safe and secure retirement income for all Americans.
SCEPA researchers Willi Semmler, Christian Proaño, and Christian Schoder recently published a SCEPA Policy Note, The Euro and the Sustainability of Current Account Imbalances, where they analyzed the sustainability of external debt of EMU members and the impact of the Euro on external imbalances. They find strong empirical support for the view that the present current account imbalances in the EMU are unsustainable and may jeopardize the long-run stability of the Euro Area. They also find that the introduction of the Euro in 1999 contributed significantly to the external imbalances among member countries. Their findings were picked up by the EconoMonitor blog and are summarized here.
by Jeff Madrick, SCEPA Senior Fellow
Republican presidential hopefuls Rick Perry, Michelle Bachman and even Jon Huntsman, who used to be reasonable, have found a new culprit. About 46 percent of Americans pay no income tax. They want to go after them. In a world where people on major TV networks claim that teachers get paid too much and there is virtually unchallengeable consensus in Washington that cutting government spending is the way to respond to economic stagnation, perhaps nothing is surprising.
The Republicans' claim repeats an equally ridiculous suggestion in the Wall Street Journal editorial pages a few years ago about what those "lucky duckies" who pay no incomes taxes get away with. Here is Michelle Bachman recently: "Part of the problem is today, only 53 percent pay any federal income tax at all; 47 percent pay nothing. We need to broaden the base so that everybody pays something, even if it's a dollar. Everyone should pay something, because we all benefit."
I'd like briefly to counter with a few facts.
On August 20, 2011, The Financial Times published a letter to the editor from Associate Professor of Economics and SCEPA Faculty Fellow Sanjay G. Reddy.
Central Question in Treasury Drama
from Dr. Sanjay G. Reddy
Sir, Gillian Tett's instructive article "The Unmasking of Our Inner Reptiles in Times of Crisis" (August 13) addresses the question of why funds are flowing into the short-term Treasuries market, even in the immediate aftermath of the US rating downgrade. The question can perhaps be put even more sharply. The recent market turmoil appears to be a result of a reduction in the deemed quality of US Treasuries. How then can one explain that a central feature of the recent drama is an increase in the relative valuation of that very asset?
The existence of a large pool of funds that must be put somewhere is an insufficient explanation, since that pool existed both before and after the triggering event. One explanation is that the rating downgrade has caused a change in investor expectations regarding the ability of the US to maintain a low interest rate regime, which will inevitably raise the cost of borrowing and thereby of investment and debt-fuelled consumption.
Another explanation is that the rating downgrade has caused a change in investor expectations regarding the US's ability to engage in needed economic stimulus in the short run. The ability of the US to serve as an importer of last resort for countries pursuing export-oriented development strategies is also thereby jeopardised.
For all these and perhaps other reasons, the downgrade may have had a more adverse indirect impact on share prices than it has had directly on Treasury bonds. It is not so much that investors wish to hold Treasury bonds, as that they do not wish to invest in shares in the real economy, about whose prospects they are increasingly jittery. This would be but a platitude were it not that the precipitating factor has been the worry about these bonds themselves.
When the "animal spirits" of investors are at play, a great many surprises are possible.
Sanjay G. Reddy
Associate Professor of Economics
New School for Social Research
New York, NY, US